Ivory Coast faces uphill battle against counterfeit medicine

Moody's slashes Greek credit rating again

Credit ratings agency Moody's Investors Services has downgraded Greece's standing yet again to Caa1 from B1 on Wednesday, in addition to assigning it a 'negative' outlook, meaning the debt-stricken country's rating could be slashed further.

AFP - Moody's Investors Service on Wednesday slashed its credit rating on debt-stricken Greece to Caa1 from B1, assigning it a 'Negative' outlook which means it could be downgraded further.

Moody's said the downgrade reflected the "increased risk that Greece will fail to stabilise its debt position without a debt restructuring" and that its private sector creditors would have to take some of the pain as a result.

It put the odds of a debt default at evens, noting that some 50 percent of Caa1 rated entities default over a five-year period.

Moody's said however that it believes current talks between Greece, the EU, International Monetary Fund and European Central Bank will "result in further official support ... and the announcement of additional austerity and structural reform measures."

The negative outlook on the Caa1 rating "reflects Moody's view that the country's very large debt burden, the significant implementation risks in its structural reform package, and the country's ongoing need for external support skew risks of future rating actions to the downside."

A ratings downgrade usually makes it more difficult for the affected country to raise fresh funds, complicating its problems, as investors demand ever higher rates of return to hand over fresh money.

Any C-rating is deemed to be high risk and near default.

In March, Moody's cut its Greek credit ratings by three notches from Ba1 to B1 and warned that they could be downgraded further given the risks to the country's stabilisation efforts.

Since then, Athens has struggled to implement additional austerity measures under the terms of a May 2010 110-billion-euro ($157-billion) bailout accord amid increasing doubts that it can balance its books without additional aid.

Moody's said Wednesday that "the first trigger for today's downgrade is the view that Greece is increasingly likely to fail to stabilize its debt ratios within the timeframe set by previously announced fiscal consolidation plans."

Accordingly, Greece will not likely to be able to return to the money markets as planned in 2012 "and will require additional financial assistance from the Troika in order to avoid a default.

"The quid pro quo for such assistance will inevitably be further fiscal austerity and economic reform measures that will be necessary to address the shortcomings of the programme to date.

"Second, Moody's believes that raising the austerity bar still higher will further increase implementation risk for the Greek programme."